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Title: Undervaluation, private information, agency costs and the decision to go private.
Authors: Weir, Charlie
Laing, David
Wright, Mike
Keywords: Private companies
Leveraged buy-outs
Public to private transactiona
Issue Date: Sep-2005
Publisher: Taylor & Francis
Citation: WEIR, C.M., LAING, D. and WRIGHT, M., 2005. Undervaluation, private information, agency costs and the decision to go private. Applied Financial Economics, 15 (13), pp. 947-961
Abstract: There is widespread anecdotal evidence that poor stock market performance is an important reason for taking a company private. The results support the perceived undervaluation hypothesis. The finding also applies to management buy-outs, which indicates that the management of these firms had private information. It is also found that firms going private had non-optimal governance structures, higher board and institutional ownership. The last finding is consistent with going private transactions providing institutions with a means of existing firms with poor market valuation, particularly during a time of very limited pressure from the market for corporate control.
ISSN: 0960-3107
Appears in Collections:Journal articles (Management)

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